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HSBC HEALTHCARE DAY
Frankfurt/Main – November 12, 2018
SAFE HARBOR STATEMENT
Forward-looking statements involve risks.This company presentation contains various statements concerning the future performance of STRATEC. These statements are based on both assumptions and estimates. Although we are convinced that these forward-looking statements are realistic, we can provide no guarantee of this. This is because our assumptions involve risks and uncertainties which could result in a substantial divergence between actual results and those expected. It is not planned to update these forward-looking statements.
FRANKFURT/MAIN – NOVEMBER 12, 2018 2
AGENDA
3FRANKFURT/MAIN – NOVEMBER 12, 2018
1. OVERVIEW AND BUSINESS MODEL2. THE IVD MARKET3. FINANCIALS4. FUTURE GROWTH
4FRANKFURT/MAIN – NOVEMBER 12, 2018
OVERVIEW ANDBUSINESS MODEL
OVERVIEW AND BUSINESS MODEL
STRATEC AT A GLANCE
FRANKFURT/MAIN – NOVEMBER 12, 2018 5
Market leader in automation solutions for thediagnostics industry and translational research
~ 1.100 employees worldwide
More than 13,000 systems with medium to high throughput installed globally (e.g. DiaSorin’s LIAISON XL | Hologic/Gen-Probe’s PANTHER | Siemens’ ADVIA Centaur | bioMérieux’s new VIDAS)
More than 25,000 low throughput systems installed globally
Revenue € 209.8 million in 2017(CAGR revenues since IPO in 1998: ~17%)
Dividend payments raised over 14 consecutive years
OVERVIEW AND BUSINESS MODEL
UNIQUE MARKET POSITION STRATEC IN THE IVD VALUE CHAIN
FRANKFURT/MAIN – NOVEMBER 12, 2018 6
DiagnosticCompanies
Blood Banks,Laboratories
Patients
STRATEC develops and manufactures fully automated analyzer systems and disposables focusing on the high growth segments in diagnostics
Partners market systems together with reagents and consumables to laboratories, blood banks and hospitals worldwide
Laboratories performing tests and offering service to doctors and patients using reagents from diagnostic companies
Growth drivers:
• Aging population
• Developing healthcare systems world wide
• High volume of new tests
OVERVIEW AND BUSINESS MODEL
BUSINESS MODEL
FRANKFURT/MAIN – NOVEMBER 12, 2018 7
STRATEC provides instrumentation, consumables, software and automation solutions– OEM development and manufacturing– More than 7,000 fully automated analyzer systems manufactured annually– Wide range of intellectual property rights
Extensive collaboration with partner during design phase– STRATEC: Engineering / automation, software, QM– Partner: System / reagent / market requirements
Systems have long market lifecycles– Leads to longstanding partnerships – Expanding installed base of systems– Product enhancement and extension drives value
“Simoa HD-1” for QuanterixConsumable for “Simoa HD-1”
OVERVIEW AND BUSINESS MODEL
SECURING RETURN ON INVESTMENT
FRANKFURT/MAIN – NOVEMBER 12, 2018 8
Long-term agreements with partners– Milestone payments during development stage– Operating sales during series production stage– Continuous revenues from consumable sales
Minimum volume commitment– Firm purchase orders– STRATEC an integral part of partners’ plans
Reliable partnership– Shortened development time– Integration of analyzer system and reagents– Agreed development budget & transfer price– High commitment by both partners “LIAISON XL” for DiaSorin
“PANTHER FUSION” for Hologic
9
THE IVD MARKET
FRANKFURT/MAIN – NOVEMBER 12, 2018
THE IVD MARKET
IVD MARKET SEGMENTS / IVD MARKET: ~ 60 BILLION USD IN 2016
FRANKFURT/MAIN – NOVEMBER 12, 2018 10
High Throughput
Low Throughput
Total instrumentation~ 8.3 billion USD
Number of systems
CAGR 2016 - 2021:
IVD Market: CAGR 2016-21 of 4-6%
CAGRs 2016-21 submarkets:Molecular Diagnostic: ~ 8% Immunodiagnostics: ~ 4%Hematology: ~ 2-4%
Source: Kalorama: “The worldwide market for In Vitro Diagnostic Tests, 10th Edition”, Aug 2016MarketsandMarkets: “In Vitro Diagnostics/IVD Market - Forecast to 2021”, Dec 2016
80%
14%
4%2%
Reagents / Chemistry
Instrumentation
Services
Software
High Throughput
Market by product type
THE IVD MARKET
OUTSOURCED VS IN HOUSE INSTRUMENTATION MARKET
FRANKFURT/MAIN – NOVEMBER 12, 2018 11
Total instrumentation
~ 8.3 billion USD
In House64 %
Outsourced36 %
In House73 %
Outsourced27 %
2010 2015 2020
In House56 %
Outsourced44 %
Source: Own estimates based on historical market data and recent industry trends
THE IVD MARKET
A SELECTION OF STRATEC CUSTOMERS
FRANKFURT/MAIN – NOVEMBER 12, 2018 12
Source: IVD News / non-public companies estimated / non-reported sector revenues estimated
… AND OTHER GAME-CHANGING COMPANIES
(acquired by Bio-Rad in January 2017)
STRATEC customer
Not a STRATEC customer
GLOBAL TOP 20 IVD COMPANIES Revenues 2017 (USD billion)
1. Roche Diagnostics 10.2
2. Abbott Diagnostics 7.3
3. Danaher 5.8
4. Siemens 5.0
5. ThermoFisher 3.5
6. Sysmex 2.4
7. bioMerieux 2.1
8. Ortho Clinical Diagnostics 1.8
9. BECTON DICKINSON 1.4
10. BIO-RAD 1.4
11. Hologic 1.2
12. CH Werfen 1.0
13. Grifols 0.8
14. Agilent 0.8
15. Diagnostica Stago 0.7
16. Qiagen 0.7
17. DiaSorin 0.7
18. Perkin Elmer 0.6
19. Fujirebio 0.4
20. Immucor ~0.4
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FINANCIALS
FINANCIALS
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KEY FIGURES - TRACK RECORD
Sales in € millionCAGR ~12%
EBIT in € millionCAGR ~10%
1 Figures adjusted for comparison; adjusted for depreciation and amortization from purchase price allocation for acquisitions, related integration expenses and other extraordinary effects. Reconciliation to IFRS figures can be found in the respective annual report.
67,5 6176
102116,6 122,7 128
144,9 146,9
184,9
209,8
0
50
100
150
200
250
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
14,311,2
14,717,6
21,8
15,6
19,5
24,126,9
32,335,5
0
5
10
15
20
25
30
35
40
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
11
FINANCIALS
15FRANKFURT/MAIN – NOVEMBER 12, 2018
KEY FIGURES - TRACK RECORD
Net income in € millionCAGR ~11%
Dividend per share in € CAGR ~14%
10,08,2
11,713,0
15,3
12,4
15,5
19,8
22,1
25,4
27,9
0,0
5,0
10,0
15,0
20,0
25,0
30,0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
0,22
0,35
0,450,50
0,55 0,560,60
0,700,75 0,77
0,80
0,00
0,10
0,20
0,30
0,40
0,50
0,60
0,70
0,80
0,90
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
1
1
1 Figures adjusted for comparison; adjusted for depreciation and amortization from purchase price allocation for acquisitions, related integration expenses and other extraordinary effects. Reconciliation to IFRS figures can be found in the respective annual report.
FINANCIALS
16FRANKFURT/MAIN – NOVEMBER 12, 2018
SALES BY OPERATING DIVISIONS
56% 55% 49%
26% 29%33%
18% 15% 18%
0%10%20%30%40%50%60%70%80%90%
100%
2015 2016 2017
Systems Service parts & consumables
Developement & services Others
Continued growth in service parts & consumables sales
- Growth driven by increased installed base, higher system complexity and acquisitions
- At 33% of total sales in 2017 versus 26% in 2015
In % of total sales
Annual sales by operating division as of Dec 31
FINANCIALS
FRANKFURT/MAIN – NOVEMBER 12, 2018 17
SUMMARY FIRST NINE MONTHS OF 2018• Organic sales decline of 4.8% to € 134.6 million; nominal: -9.9% (9M 2017: € 149.4 million):
- Negative effects from first time adoption of IFRS 15 and foreign exchange rates
- Reduced systems sales, weaker Diatron business and temporary slowdown in the demand for service parts & consumables
• Assumption of significant upturn in growth momentum in Q4 2018 and 2019 as a whole confirmed by latest developments
• Adjusted EBIT margin down by 370 bps yoy to 12.7% due to missing economies of scale and increased expenses related to strong project pipeline
• Further contract wins and several promising negotiations in advanced stage
• Identified annual pre-tax cost savings potential of € 2.0 million to € 3.0 million from 2021 onwards
• Number of employees up by 12.4% to 1,208 in the light of full project pipeline
FINANCIALS 9M 2018 AT A GLANCE1
FINANCIALS
FRANKFURT/MAIN – NOVEMBER 12, 2018
bps = basis points
1 For comparison purposes, adjusted figures exclude amortization resulting from purchase price allocations in the context of acquisitions and the associated reorganization expenses, as well as other non-recurring effects.
2 In accordance with IFRS 9 and IFRS 15.3 Not retrospectively restated to reflect IFRS 9 and IFRS 15 (modified retrospective approach). Retrospectively restated to reflect the classification of the nucleic acid
preparation business as a discontinued operation in accordance with IFRS 5 and correction in accordance with IAS 8.41.4 Results from continuing operations.
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FINANCIALS
FRANKFURT/MAIN – NOVEMBER 12, 2018
Consolidated net incomeEBIT
ADJUSTMENTS 9M 2018
19
FINANCIALS
FRANKFURT/MAIN – NOVEMBER 12, 2018
SALES
As of September 30
90,4
105,3 107,2
126,3
149,4
134,6
0
20
40
60
80
100
120
140
160
9M/13 9M/14 9M/15 9M/16 9M/17 9M/18
In € million
20
9M 2018 sales decline:• Negative effects from foreign exchange
rates (-2.2 ppts) and first-time adoption of IFRS 15 (-2.9 ppts) organic sales decline of 4.8%
• Lower systems and service parts & consumables sales as well as weaker Diatron business
• Current customer forecasts imply significant recovery for Q4 2018 and beyond
ppts = Percentage points
FINANCIALS
FRANKFURT/MAIN – NOVEMBER 12, 2018
9M 2018 adjusted EBIT margin at 12.7% • Adjusted EBIT down 30.5% yoy to € 17.0
million- Negative effect of € 0.9 million due to
first-time adoption of IFRS 15
• Margin decline of 370 bps yoy- Negative scale effects- Increased expenses related to strong
project pipeline
9M EBIT EBIT margin
EBIT in € million EBIT margin in %
13,4
17,719,2 18,4
24,5
17,0
4%
6%
8%
10%
12%
14%
16%
18%
20%
02468
101214161820222426
9M/13 9M/14 9M/15 9M/16 9M/17 9M18
As of September 30
ADJUSTED EBIT AND EBIT MARGIN
21
FINANCIALS
FRANKFURT/MAIN – NOVEMBER 12, 2018
CASH FLOW AND NET DEBT
22
IFRS (€ million) 9M 2018
9M 2017
yoy
Cash flow – operating activities
15.4 25.8 -40.3%
Cash flow – investment activities -3.9 -9.7 -59.8%
Cash flow – financing activities
-9.9 -16.1 -38.5%
Free cash flow 11.5 16.1 -28.6%
• 9M 2018 operating cash flow down by 40.3% yoy due to lower earnings levels and higher inventories
• Higher capex spending due to significant capacity expansion in Birkenfeld partly offset by disposal of financial assetsIFRS (€ million) 9M
2018FY
2017Change
Cash and cash equivalentsat end of period 25.1 24.1 4.1%
Net debt 44.2 48.8 -9.4%
FINANCIALS
23
Operational Efficiency• Increase volume of insourced subassemblies• Streamlining geographical R&D and production footprint• Implementation of group wide ERP-system
Portfolio Optimizations• Disposal of nucleic acid sample preparation business (sales of € 2.5 million and EBIT-loss of
€ 0.9 million in 2017)• Selective discontinuation of some smaller/end-of-life cycle and less profitable product lines
• Optimizing R&D opportunity costs• Optimizing risk reward profile of development pipeline
1) versus 2018 cost base
Expected annual pre-tax cost savings of € 2.0 million to € 3.0 million from 20211) onwards
Focused Allocation of Development Resources
FRANKFURT/MAIN – NOVEMBER 12, 2018
EARNINGS IMPROVEMENT INITIATIVE
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FUTURE GROWTH
FUTURE GROWTH
FRANKFURT/MAIN – NOVEMBER 12, 2018
FINANCIAL GUIDANCE
Outlook for 2018• Sales expected to decline organically in the low- to mid-single digit percentage range• Adjusted EBIT margin of around 11% to 13%
First indication for 2019• Significantly positive organic sales growth expected in 2019
- Numerous upcoming product launches and ongoing ramp-up phases- Partial postponement of sales originally expected for 2018
• Adjusted EBIT margin to be significantly higher than the level of 2018- Positive scale effects- First positive impact from already defined earnings improvement measures
25
FUTURE GROWTH
FRANKFURT/MAIN – NOVEMBER 12, 2018 26
FOCUS IN 2018 AND BEYOND• Reaccelerate top-line growth from Q4 2018 onwards and reduce earnings volatility across
business units• Further realize synergies through development activities across STRATEC businesses • Leverage expanded platform offering• Achieve milestones and market launches within foreseen timeframe
- Expected launches within the next couple of months among others include instruments for DiaSorin, Becton Dickinson, Quotient and the KleeYa Analyzer platform
• Drive results from defined earnings improvement initiative• Implementation of a group-wide ERP system to further drive process efficiency• Expand development capacities including significant extension of buildings in Birkenfeld
27
APPENDIX
FRANKFURT/MAIN – NOVEMBER 12, 2018
APPENDIX
28
KEY FIGURES AT A GLANCE
IFRS (€ million) 2013 2014 2015 2016 2017
Sales 128.0 144.9 146.9 184.9 209.8
Adjusted EBIT 19.5 24.1 26.9 32.2 35.5
Adjusted EBIT margin (%) 15.2 16.6 18.3 17.4 16.9
Adjusted Consolidated net income 15.5 19.8 22.1 25.3 27.9
Adjusted Earnings per share (€) 1.32 1.68 1.87 2.14 2.35
Dividend per share (€) 0.60 0.70 0.75 0.77 0.80
No. of employees 546 544 583 976 1,086
Total assets 117.8 137.8 158.9 258 264
Equity ratio (%) 82.5 81.3 82.0 55.7 59.8
Free cash flow 13.5 32.9 17.3 -70.4 14.4
Figures adjusted for comparison; adjusted for depreciation and amortization from purchase price allocation for acquisitions, related integration expenses and other extraordinary effects. Reconciliation to IFRS figures can be found in the respective annual report.
FRANKFURT/MAIN – NOVEMBER 12, 2018
SHAREHOLDER STRUCTURE(as of: May 2018)
APPENDIX
29
SHAREIPO Aug. 1998Number of shares 11,962,495Share price (11/07/2018) € 59.20Market capitalization € 708 million
Fixed and family ownership(incl. investment companies)
Treasury shares
Retail investors incl. notidentified institutional investors
Institutional investors
Institutional investors > 3%:OppenheimerFundsColumbia Threadneedle Investments Allianz BNP Paribas Investment PartnersNN Group
41.2%
0.1%
37.0%
21.7%
FRANKFURT/MAIN – NOVEMBER 12, 2018
STRATEC Biomedical AGGewerbestr. 3775217 BirkenfeldGermany
www.stratec.com
CONTACT
THANK YOU FOR YOUR ATTENTION
CONTACT
Marcus WolfingerCEO
Jan KeppelerHead of Investor Relations & Corporate CommunicationsPhone +49 7082 7916-6515Fax +49 7082 [email protected]
30FRANKFURT/MAIN – NOVEMBER 12, 2018